STATE ADOPTS RULES FOR RIDESHARING

State officials on Thursday approved landmark regulations for smartphone-based ridesharing companies — rules that could serve as a national benchmark for the growing industry.

The 5-0 vote by the California Public Utilities Commission requires businesses such as Uber, Lyft and Sidecar to conduct criminal background checks and establish a training program for their drivers, have those drivers obtain a special license from the commission, carry an insurance policy with minimum coverage of $1 million per incident and establish zero tolerance for drug or alcohol use by drivers.

From downtown San Diego to Washington, D.C., ridesharing businesses have become a trendy alternative to hailing a cab. Clients can download a smartphone app, punch in a requested destination and track their driver approaching in real time.

More than a dozen taxi owners and drivers at Thursday’s commission hearing in San Francisco argued that the agency’s policies, particularly regarding insurance coverage, don’t go far enough in regulating ridesharing companies. The taxi industry has complained that its fast-emerging competitor is benefiting from an uneven playing field.

Commissioners said they believe the new rules will restore some balance.

“I know some people who only take taxis. I know some people who only take Lyft, Uber or Sidecar,” said Commissioner Mike Florio. “People have different needs. This decision allows both to take place on what I think is a fair basis.”

Seeking legitimacy

Ridesharing companies have said they hope state oversight will put an end to questions about the legitimacy of their business model.

In June, the Los Angeles Transportation Department issued a cease-and-desist letter to Uber, Lyft and Sidecar citing violations of city ordinances. The companies have continued to cooperate after forging temporary agreements with the utilities commission.

In July, the San Diego Metropolitan Transit System, which regulates taxis in the San Diego region, warned the public that the companies “are not subject to any government regulations or vetting.”

In reaction to Thursday’s vote, San Francisco-based Sidecar said on Twitter: “It’s official! Rideshare is a new, official transportation category in CA!”

On Lyft’s blog, company co-founders John Zimmer and Logan Green described the commission’s action as groundbreaking. “We’ll now be able to look back in 10 years knowing that today was a milestone,” they said.

Setting precedent

The commission is the first statewide panel in the United States to set ridesharing rules. The agency created a new category for the businesses; it will call them transportation network companies.

The for-profit ridesharing sector kicked into high gear last year with the launch of Lyft and Sidecar in San Francisco. Uber, also based in San Francisco, started in 2009 with its luxury rides and added lower-cost service in 2012.

Ridesharing has spread from the West Coast to dozens of cities nationwide. Much of the industry’s local operations are concentrated in downtown San Diego, Little Italy and Hillcrest, with some service provided in outlying suburban cities.

Ridesharing drivers typically own, insure and maintain their own vehicles and often live in communities where they work. They are not employed by ridesharing companies, which facilitate the rides and take 20 percent of each fare.